Executive Summary / Key Takeaways

• SenesTech is undergoing a significant transformation, driven by the rapid adoption of its Evolve rodent fertility control product line, which is shifting the company towards sustainable, high-margin revenue growth.
• The company reported record quarterly revenues of $690,000 in Q3 2025, a 43% year-over-year increase, with Evolve products representing 85% of sales and gross margins consistently above 60%.
• Strategic cost containment and operational efficiencies, including a new manufacturing facility, have resulted in the lowest adjusted EBITDA loss in company history at $1.2 million in Q3 2025, with management targeting cash flow breakeven at $1.5 million in quarterly revenue by the second half of 2026.
• A strengthened balance sheet, with $10.2 million in cash and short-term investments as of September 30, 2025, following successful warrant exercises, has alleviated prior going concern doubts and provides a potential path to profitability without further dilutive equity offerings.
• SenesTech's differentiated, non-lethal fertility control technology, particularly Evolve, positions it uniquely in a growing market driven by regulatory restrictions on traditional rodenticides and increasing demand for safer, sustainable pest management alternatives.

The Dawn of a New Era in Pest Management

SenesTech, Inc. (NASDAQ:SNES) stands at the forefront of a paradigm shift in pest control, moving beyond traditional lethal methods to embrace innovative fertility management. Founded in Nevada in 2004 and later reincorporated in Delaware, the company has dedicated itself to developing and commercializing solutions that manage animal pest populations through reproductive control. This mission is increasingly relevant in an industry grappling with evolving regulatory landscapes, growing environmental concerns, and a demand for more humane and sustainable alternatives to conventional poisons.

The company's journey began with ContraPest, a liquid bait designed to target the reproductive systems of rats. While effective, ContraPest's form factor limited its broader market appeal. However, a pivotal moment arrived in 2024 with the launch of the Evolve product line. This strategic pivot has not only revitalized SenesTech's financial trajectory but has also positioned it as a specialized innovator in a market dominated by larger, more traditional pest control providers.

Technological Edge: The Evolve Revolution

SenesTech's core technological differentiation lies in its proprietary fertility control products. ContraPest, its initial offering, is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide and triptolide. This formulation targets both male and female rats, is highly palatable, and crucially, does not cause illness or behavioral changes, thereby avoiding bait aversion and leading to significant, sustained population reductions. ContraPest is registered in all 50 U.S. states and major territories.

The true "game changer" for SenesTech, however, is the Evolve product line. Evolve Rat, launched in January 2024, is a soft bait utilizing cottonseed oil as its active ingredient. This novel formulation reduces fertility in both male and female rats, maintaining high palatability for sustained consumption. A key differentiator for Evolve Rat is its classification as a minimum risk pesticide under the EPA's FIFRA, Section 25b. This classification exempts it from federal registration, significantly broadening its marketability and allowing for agricultural applications. Evolve Rat is authorized for sale in 48 states and territories. Building on this success, Evolve Mouse, a modified soft bait with cottonseed oil, was launched in May 2024, extending fertility control to mice and further expanding the addressable market. Evolve Mouse is authorized for sale in 37 states and territories.

The tangible benefits of Evolve's technology are clear for investors. Its soft bait form factor is more conducive to diverse distribution channels, particularly e-commerce, and its lower cost relative to ContraPest contributes to higher inherent gross margins. The minimum risk pesticide classification streamlines regulatory hurdles, accelerating market entry. SenesTech is continuously enhancing its products and pursuing regulatory approvals to broaden their use. The company has strategically paused new product development to laser-focus all efforts on the commercialization and growth of Evolve Rat and Evolve Mouse, ensuring maximum resource allocation to its most impactful products. An accessory like the Lure bait dispenser further enhances Evolve's versatility, allowing deployment in hard-to-reach areas and expanding product accessibility.

Financial Performance: A Trajectory Towards Profitability

SenesTech's financial performance in recent quarters underscores the transformative impact of the Evolve product line and the company's disciplined operational strategy. In the third quarter of 2025, the company reported record quarterly revenues of $690,000, marking a substantial 43% increase compared to $482,000 in Q3 2024. For the nine months ended September 30, 2025, total revenues reached $1.8 million, a 33% increase from $1.356 million in the comparable 2024 period.

This growth was overwhelmingly driven by Evolve, which accounted for approximately 85% of Q3 2025 revenues, up from 69% in Q3 2024. Evolve Rat revenue alone surged by 585.9% year-over-year in Q3 2025 to $535,000, while Evolve Mouse revenue increased by 628.6% to $51,000. Conversely, ContraPest sales declined by 31.1% in Q3 2025, reflecting the strategic shift in focus.

Gross margins have seen a dramatic improvement, primarily due to the favorable product mix shift towards Evolve and lower input costs from production-scale sourcing. Gross profit for Q3 2025 was $433,000, representing a robust gross margin of 62.8%. For the nine months ended September 30, 2025, gross profit reached $1.155 million, with a gross margin of 64.2%, a significant improvement from 51.5% in the prior year. Management anticipates these strong margins to remain consistent, with potential for further improvement as operational efficiencies from the new manufacturing facility take hold.

Operating expenses demonstrate the company's commitment to cost discipline. Total operating expenses in Q3 2025 were down 4% year-over-year and 12% sequentially. For the nine months ended September 30, 2025, research and development expenses decreased by $43,000 due to cost containment, partially offset by increased facility costs from the April 2025 relocation. Selling, general, and administrative expenses, however, increased by $131,000 over the nine-month period, primarily due to higher legal fees related to an ongoing lawsuit, increased franchise fees, and corporate governance costs. Despite these, the company achieved its best adjusted EBITDA loss in history, reporting a loss of $1.2 million in Q3 2025.

Liquidity has significantly strengthened, alleviating previous concerns about the company's ability to continue as a going concern. As of September 30, 2025, SenesTech held $10.2 million in cash, cash equivalents, and short-term investments.

This improved position is largely due to financing transactions in 2025, which generated net proceeds of $13.2 million from equity sales and warrant exercises. Management believes this capital, combined with anticipated revenue, will be sufficient to fund operations for the next 12 months and the foreseeable future, potentially without requiring further dilutive equity offerings. The company also retains approximately $7.5 million in capacity under its At-The-Market (ATM) facility, providing an opportunistic funding option.

Strategic Execution and Market Expansion

SenesTech's growth strategy is multifaceted, leveraging Evolve's unique attributes across diverse distribution channels and market verticals.

• E-commerce: This channel remains the largest contributor, representing over 50% of quarterly sales. E-commerce revenue grew 55% year-over-year in Q3 2025, with Amazon (AMZN) leading the way with double-digit monthly growth. The company has expanded its online presence to include Walmart.com (WMT), HomeDepot.com (HD), TractorSupply.com (TSCO), and Lowes.com , recognizing e-commerce success as a crucial "proof point" for broader retail expansion.
• Municipal Markets: This vertical is experiencing rapid adoption, with revenue growing 139% year-over-year in Q3 2025. Deployments are ongoing in major cities like New York City, Chicago (Wicker Park Bucktown SSA, Old Town area), Baltimore, San Francisco, Los Angeles County, and the Boston area. In New York City, the rat contraceptive pilot program is showing "exceptional results" with 100% consumption of Evolve. These programs often start as trials, with successful outcomes leading to significant reorders and large-scale expansion, potentially generating millions in revenue.
• Pest Management Professionals (PMPs): PMP revenue increased 72% sequentially in Q3 2025, representing nearly 20% of total revenues. A wide variety of PMP partners are integrating fertility control into their services, including an internationally known theme park now in its third monthly order cycle.
• Brick-and-Mortar Retail: Retail sales surged 254% year-over-year in Q3 2025, driven by expanded adoption with ACE Hardware and orders from Bradley Caldwell, a wholesaler serving over 8,000 retail locations. SenesTech is in discussions with major home improvement chains, with a test deployment in approximately 100 Lowe's stores anticipated by the end of Q2 2026.
• International Markets: The company has signed distribution agreements in over 15 countries. New Zealand has officially approved Evolve, with initial orders in progress. Approvals and shipments have occurred in Hong Kong, the United Arab Emirates, the Maldives, and the Netherlands. Large orders are expected from Australia and New Zealand upon regulatory approval, with management anticipating "many more country approvals over the course of the next 3 months."
• Other Verticals: SenesTech is penetrating new markets such as warehousing and distribution, exemplified by a substantial order shipped to a large Midwest company. Agribusiness also presents a significant opportunity, with trials ongoing in sugarcane fields, almond orchards, and granaries, addressing the immense problem of rodent-destroyed food supplies.

Operationally, SenesTech completed its move to a new, larger manufacturing facility in Phoenix in April 2025. This facility is designed to increase efficiency and production capacity, currently capable of producing approximately $10 million in revenue with one shift. The facility can accommodate at least three manufacturing lines, with additional lines requiring a relatively low capital expenditure of $300,000 to $400,000, ensuring scalability to meet anticipated demand.

Competitive Landscape and Strategic Positioning

SenesTech operates in a pest control market dominated by large, diversified players like Rollins, Inc. , Rentokil Initial , and Corteva Agriscience , which primarily offer traditional chemical and service-based solutions. SenesTech's core competitive advantage lies in its proprietary, non-lethal fertility control technology, Evolve, which differentiates it from these rivals.

While larger competitors benefit from extensive service networks, global reach, and diversified revenue streams, SenesTech's focus on fertility control addresses a growing demand for humane and sustainable pest management. This niche positioning allows SenesTech to appeal to customers, such as municipalities and food-related industries, where traditional poisons are restricted or undesirable. The EPA's minimum risk pesticide classification for Evolve further enhances its appeal and market access.

The ongoing lawsuit with Liphatech Inc., a traditional rodenticide manufacturer, highlights the competitive tension. Management views this legal challenge as a sign that "rodent birth control in general is beginning to scare the poison companies," suggesting that Evolve is gaining enough traction to be perceived as a threat to established players. This underscores SenesTech's disruptive potential in the industry.

However, SenesTech's smaller scale compared to its larger competitors presents certain vulnerabilities, including potentially higher operational costs and less diversified revenue streams. Rollins (ROL) and Rentokil (RTO), with their vast customer bases and operational efficiencies, can leverage their scale to navigate regulatory complexities and market fluctuations more readily. Corteva (CTVA), with its strong R&D in agricultural solutions, also poses a competitive force in overlapping markets. SenesTech's strategy to counter these forces involves aggressive market penetration in targeted verticals, continuous product enhancement, and stringent cost management to achieve profitability.

Outlook and Risks

SenesTech's management has provided a clear outlook, targeting cash flow breakeven at approximately $1.5 million in quarterly revenue, or $6.5 million annually, by the second half of 2026. This objective is underpinned by the continued scaling of the Evolve product family, expansion across retail and professional distribution channels, and sustained operational efficiencies. The company expects to achieve this without proactively seeking further dilutive equity offerings, relying on its current cash position, anticipated revenue growth, and opportunistic ATM issuances if favorable market conditions arise.

Key assumptions for this outlook include continued double-digit monthly growth in e-commerce, successful expansion into brick-and-mortar retail (e.g., Lowe's (LOW) test deployment), increased adoption in municipal and PMP channels, and the realization of large international orders upon regulatory approvals. Management also plans to strategically increase investment in sales personnel and manufacturer representatives to support market expansion.

Despite the positive momentum, risks remain. SenesTech has a history of significant operating losses and may never achieve profitability or positive cash flows. The company's ability to fund operations is contingent on meeting revenue and margin targets, and additional financing may be required if these are not met. The ongoing legal dispute with Liphatech Inc. could result in unspecified damages and injunctive relief, potentially impacting financial performance and operations, although management believes it has strong defenses. Furthermore, the pest control industry is subject to evolving regulations and competitive pressures, which could affect product marketability and demand.

Conclusion

SenesTech is at a pivotal juncture, transforming from a development-stage company into a commercial entity poised for sustainable growth. The Evolve product line, with its innovative fertility control technology and favorable regulatory classification, is the engine driving this transformation, unlocking new market opportunities and significantly improving the company's financial profile. Record revenues, expanding gross margins, and disciplined cost management are converging to create a credible pathway to cash flow profitability, a critical inflection point for the company.

With a strengthened balance sheet and a clear strategic roadmap for market expansion across e-commerce, municipal, professional, and international channels, SenesTech is well-positioned to capitalize on the growing demand for non-lethal, sustainable pest management solutions. While risks inherent in commercialization and litigation persist, the company's technological leadership and focused execution offer a compelling investment thesis for those seeking exposure to a disruptive force in the pest control industry.